I don't think you understand how economics work. Almost everything you say on this subject is wrong.

Just consider, for the sake of the argument, that it is the other way around: it's you who do not understand economics and who say mostly wrong things whenever you speak on the subject... But, of course, you cannot accept that possibility. How in heavens could you ever be wrong?....

That's where I was going with my tagline...........

Let's try this modelling exercise. Let's envision a world in a parallel universe somewhere let's say, where I'm right.........

I don't think you understand how economics work. Almost everything you say on this subject is wrong.

Just consider, for the sake of the argument, that it is the other way around: it's you who do not understand economics and who say mostly wrong things whenever you speak on the subject... But, of course, you cannot accept that possibility. How in heavens could you ever be wrong?....

That's how you think. You cannot accept that you might be wrong. How in heavens could you ever be wrong?

I don't think you understand how economics work. Almost everything you say on this subject is wrong.

Just consider, for the sake of the argument, that it is the other way around: it's you who do not understand economics and who say mostly wrong things whenever you speak on the subject... But, of course, you cannot accept that possibility. How in heavens could you ever be wrong?....

That's how you think. You cannot accept that you might be wrong. How in heavens could you ever be wrong?

Let me illustrate to you, with an example, how I look at economical questions. Let's take the euro and its creation:

1. Some 30 years ago Germany was worried. It had a highly efficient economy but the strength of the Deutsch Mark (DM) made its economy only marginally competitive. The problem could only be solved by the devaluation of the DM, but the EU rules and the free convertibility of the DM meant that such a devaluation would not be possible. At that time the EU was starting to think about an European monetary union and a common currency.

2. Germany realized that the solution to its problem might lay on the euro. If a monetary union was created with a number of economies weaker than the German economy, the euro would be a currency less strong than the DM and its adoption by Germany would be equivalent to a permanent devaluation, making the German economy again competitive without the risk of a future revaluation of the euro putting Germany back in the original situation.

3. In fact Germany made sure that the euro wouldn't become as strong as the DM was. By allowing - in fact, pushing - weaker economies into the eurozone, one would make sure that the euro would not rise against other currencies. Allowing Italy, Spain, Portugal, Greece in the monetary union was enough to guarantee such a result. Which explains why they were allowed in when they shouldn't have been. At the same time, by imposing some disciplinary rules to the euro, Germany made sure that things wouldn't get out of hand. The euro would become weaker than the DM but there wouldn't be the risk of letting things go too far. And the strength of the German economy, among all other weaker economies, wasn't enough to push the euro up.

4. As a result of this operation, Germany has an incredible trade surplus, equal to 8% of its GDP, at the cost of its partners. People who think that creating the monetary union was a mistake fail to understand why it was created. It wasn't meant to be waterproof and a monetary success, it was meant as a tool to prop up the German economy. Germany only has to see that its problems do not become so great that the union may disappear. Its actual control of the ECB helps keeping things more or less controlled. It may still unravel, but Germany is going to do its best to avoid that. If that means letting Greece go down that's ok. Greece is not big enough to put the German strategy at risk. Things would be different if it was Italy.

This analysis is not usually made by the run of the mill economists, who like to think that the euro was just a mistake. I look at it differently because my perspective is not only that of an economist, but also that of a political scientist. Political objectives command economic decisions. If you do not understand the political intentions, you may fail to understand the economic issues...

Let me illustrate to you, with an example, how I look at economical questions. Let's take the euro and its creation:

1. Some 30 years ago Germany was worried. It had a highly efficient economy but the strength of the Deutsch Mark (DM) made its economy only marginally competitive. The problem could only be solved by the devaluation of the DM, but the EU rules and the free convertibility of the DM meant that such a devaluation would not be possible. At that time the EU was starting to think about an European monetary union and a common currency.

2. Germany realized that the solution to its problem might lay on the euro. If a monetary union was created with a number of economies weaker than the German economy, the euro would be a currency less strong than the DM and its adoption by Germany would be equivalent to a permanent devaluation, making the German economy again competitive without the risk of a future revaluation of the euro putting Germany back in the original situation.

3. In fact Germany made sure that the euro wouldn't become as strong as the DM was. By allowing - in fact, pushing - weaker economies into the eurozone, one would make sure that the euro would not rise against other currencies. Allowing Italy, Spain, Portugal, Greece in the monetary union was enough to guarantee such a result. Which explains why they were allowed in when they shouldn't have been. At the same time, by imposing some disciplinary rules to the euro, Germany made sure that things wouldn't get out of hand. The euro would become weaker than the DM but there wouldn't be the risk of letting things go too far. And the strength of the German economy, among all other weaker economies, wasn't enough to push the euro up.

4. As a result of this operation, Germany has an incredible trade surplus, equal to 8% of its GDP, at the cost of its partners. People who think that creating the monetary union was a mistake fail to understand why it was created. It wasn't meant to be waterproof and a monetary success, it was meant as a tool to prop up the German economy. Germany only has to see that its problems do not become so great that the union may disappear. Its actual control of the ECB helps keeping things more or less controlled. It may still unravel, but Germany is going to do its best to avoid that. If that means letting Greece go down that's ok. Greece is not big enough to put the German strategy at risk. Things would be different if it was Italy.

This analysis is not usually made by the run of the mill economists, who like to think that the euro was just a mistake. I look at it differently because my perspective is not only that of an economist, but also that of a political scientist. Political objectives command economic decisions. If you do not understand the political intentions, you may fail to understand the economic issues...

You put forth a plausible case Sertorio and I commend you for it.

One thing still bothers me though. Whilst the Euro might be in Germany's best interests it is clearly not in the best interests of several weaker European economies including that of Portugal - for the obvious reason that it prices their exports out of the global market resulting in trade defects and accumulating debt. I refuse to believe that the leaders of these countries were so dumb that they could not have foreseen that. So why did they not retain their national currencies that the market could have routinely devalued and revalued for them to correct current account and capital account imbalances?

One thing still bothers me though. Whilst the Euro might be in Germany's best interests it is clearly not in the best interests of several weaker European economies including that of Portugal - for the obvious reason that it prices their exports out of the global market resulting in trade defects and accumulating debt. I refuse to believe that the leaders of these countries were so dumb that they could not have foreseen that. So why did they not retain their national currencies that the market could have routinely devalued and revalued for them to correct current account and capital account imbalances?

In the case of Portugal, at least, the reasoning was that joining the euro would bring interest rates way down. It was true but it was dumb nevertheless, because that would be only a short term benefit if one was not capable of making the economy more competitive. That's what happened in Portugal. Besides, because the economy was not competitive enough, low interest rates brought heavy indebtedness. But in the minds of politicians the short term electoral benefit was weightier than the longe term economic disaster...

I don't think you understand how economics work. Almost everything you say on this subject is wrong.

Just consider, for the sake of the argument, that it is the other way around: it's you who do not understand economics and who say mostly wrong things whenever you speak on the subject... But, of course, you cannot accept that possibility. How in heavens could you ever be wrong?....

That's how you think. You cannot accept that you might be wrong. How in heavens could you ever be wrong?

Let me illustrate to you, with an example, how I look at economical questions. Let's take the euro and its creation:

1. Some 30 years ago Germany was worried. It had a highly efficient economy but the strength of the Deutsch Mark (DM) made its economy only marginally competitive. The problem could only be solved by the devaluation of the DM, but the EU rules and the free convertibility of the DM meant that such a devaluation would not be possible. At that time the EU was starting to think about an European monetary union and a common currency.

2. Germany realized that the solution to its problem might lay on the euro. If a monetary union was created with a number of economies weaker than the German economy, the euro would be a currency less strong than the DM and its adoption by Germany would be equivalent to a permanent devaluation, making the German economy again competitive without the risk of a future revaluation of the euro putting Germany back in the original situation.

3. In fact Germany made sure that the euro wouldn't become as strong as the DM was. By allowing - in fact, pushing - weaker economies into the eurozone, one would make sure that the euro would not rise against other currencies. Allowing Italy, Spain, Portugal, Greece in the monetary union was enough to guarantee such a result. Which explains why they were allowed in when they shouldn't have been. At the same time, by imposing some disciplinary rules to the euro, Germany made sure that things wouldn't get out of hand. The euro would become weaker than the DM but there wouldn't be the risk of letting things go too far. And the strength of the German economy, among all other weaker economies, wasn't enough to push the euro up.

4. As a result of this operation, Germany has an incredible trade surplus, equal to 8% of its GDP, at the cost of its partners. People who think that creating the monetary union was a mistake fail to understand why it was created. It wasn't meant to be waterproof and a monetary success, it was meant as a tool to prop up the German economy. Germany only has to see that its problems do not become so great that the union may disappear. Its actual control of the ECB helps keeping things more or less controlled. It may still unravel, but Germany is going to do its best to avoid that. If that means letting Greece go down that's ok. Greece is not big enough to put the German strategy at risk. Things would be different if it was Italy.

This analysis is not usually made by the run of the mill economists, who like to think that the euro was just a mistake. I look at it differently because my perspective is not only that of an economist, but also that of a political scientist. Political objectives command economic decisions. If you do not understand the political intentions, you may fail to understand the economic issues...

The EU benefitted both Germany and the S European states. Germany could more easily export its goods because as you say the euro was not as strong as the DM. But the S Europeans could borrow at lower interest rates.

South European governments lacked the fiscal discipline to curb spending. They built up the welfare states on borrowed money made possible by the idea that somebody, likely the Germans will bail them out if they get into trouble. The fault likes in the South European voter who kept demanding more free stuff from the government, pushing them to borrow. This was true, especially for Greece.

Had they not been part of the EU, the S European governments could not borrow at such low rates. Their currencies will fall and interest rates would have gone up. This would have place some spending restraint on them.

You blame the Germans. I blame Socialism that demands an ever expanding welfare state.

I don't think you understand how economics work. Almost everything you say on this subject is wrong.

Just consider, for the sake of the argument, that it is the other way around: it's you who do not understand economics and who say mostly wrong things whenever you speak on the subject... But, of course, you cannot accept that possibility. How in heavens could you ever be wrong?....

That's how you think. You cannot accept that you might be wrong. How in heavens could you ever be wrong?

Let me illustrate to you, with an example, how I look at economical questions. Let's take the euro and its creation:

1. Some 30 years ago Germany was worried. It had a highly efficient economy but the strength of the Deutsch Mark (DM) made its economy only marginally competitive. The problem could only be solved by the devaluation of the DM, but the EU rules and the free convertibility of the DM meant that such a devaluation would not be possible. At that time the EU was starting to think about an European monetary union and a common currency.

2. Germany realized that the solution to its problem might lay on the euro. If a monetary union was created with a number of economies weaker than the German economy, the euro would be a currency less strong than the DM and its adoption by Germany would be equivalent to a permanent devaluation, making the German economy again competitive without the risk of a future revaluation of the euro putting Germany back in the original situation.

3. In fact Germany made sure that the euro wouldn't become as strong as the DM was. By allowing - in fact, pushing - weaker economies into the eurozone, one would make sure that the euro would not rise against other currencies. Allowing Italy, Spain, Portugal, Greece in the monetary union was enough to guarantee such a result. Which explains why they were allowed in when they shouldn't have been. At the same time, by imposing some disciplinary rules to the euro, Germany made sure that things wouldn't get out of hand. The euro would become weaker than the DM but there wouldn't be the risk of letting things go too far. And the strength of the German economy, among all other weaker economies, wasn't enough to push the euro up.

4. As a result of this operation, Germany has an incredible trade surplus, equal to 8% of its GDP, at the cost of its partners. People who think that creating the monetary union was a mistake fail to understand why it was created. It wasn't meant to be waterproof and a monetary success, it was meant as a tool to prop up the German economy. Germany only has to see that its problems do not become so great that the union may disappear. Its actual control of the ECB helps keeping things more or less controlled. It may still unravel, but Germany is going to do its best to avoid that. If that means letting Greece go down that's ok. Greece is not big enough to put the German strategy at risk. Things would be different if it was Italy.

This analysis is not usually made by the run of the mill economists, who like to think that the euro was just a mistake. I look at it differently because my perspective is not only that of an economist, but also that of a political scientist. Political objectives command economic decisions. If you do not understand the political intentions, you may fail to understand the economic issues...

The EU benefitted both Germany and the S European states. Germany could more easily export its goods because as you say the euro was not as strong as the DM. But the S Europeans could borrow at lower interest rates.

South European governments lacked the fiscal discipline to curb spending. They built up the welfare states on borrowed money made possible by the idea that somebody, likely the Germans will bail them out if they get into trouble. The fault likes in the South European voter who kept demanding more free stuff from the government, pushing them to borrow. This was true, especially for Greece.

Had they not been part of the EU, the S European governments could not borrow at such low rates. Their currencies will fall and interest rates would have gone up. This would have place some spending restraint on them.

You blame the Germans. I blame Socialism that demands an ever expanding welfare state.

My argument was about the eurozone, not about the EU... As usual, you have some difficulty in following my arguments...

Oh I see, you want to remain in the EU but not adopt the euro. Well, my argument still stands. it means you won't be able to borrow at cheap interest rates. Your currency will fall making it more expensive for you to import. Your standard of living will be poorer, outside the eurozone.

Oh I see, you want to remain in the EU but not adopt the euro. Well, my argument still stands. it means you won't be able to borrow at cheap interest rates. Your currency will fall making it more expensive for you to import. Your standard of living will be poorer, outside the eurozone.

What's your point? Really, what is really your point? All you have are objections, but never a constructive proposal based on something more than ideological misconceptions...